Leveraging Loyalty

Reaping RewardsLoyalty marketing programs recognize and reward the best customers of a business. Nearly one-third of U.S. consumers (32.3%) consider their participation in retail rewards programs to be “more important” as they seek to stretch their household budgets in the recessionary economy, according to survey research from Colloquy.

In another significant result from its research, Colloquy found that while participation by the general population in loyalty programs rose 19% since last measured prior to the recession in 2007, the increase for women over the past two years was significantly higher at 29%, with women trailing only young adults (32%) in that measurement.

Loyalty continues to help convenience stores reach more customers in new and innovative ways.

At Flash Foods Inc., the average ring on loyalty cards is $1-$1.75 more depending on whether fuel is a part of the transaction. The Waycross, Ga. Company has added some 50,000 active loyalty users in the last six months, said Jeannie Amerson, advertising and loyalty manager for Flash Foods, which operates more than 170 stores in Georgia and Florida.

“With credit/debit fuel transactions rising almost 20% in 2009 to 60% of our total gallons purchased, the ACH payment addition to our loyalty card has proven to be a valuable component,” Amerson said.

To spice up loyalty programs, more chains are crafting partnerships, said Kelly Hlavinka, a partner with Colloquy. “We’re seeing partnerships between noncompetitive entities, such as grocers sending people to retail outlets as part of their reward mechanism that has a win-win for both of them. And then partnerships with manufacturers that provide customers bonus opportunities when they buy those products at the c-store.”

Also on the horizon for 2010, expect to see more channels integrating an ongoing cause into the loyalty program. “One great example, is Shell and Safeway partner with a coalition called Air Miles in Canada, which integrated the cause of going green and being more ecologically friendly into their program. Customers can earn rewards from buying green products at certain retailers, get a bonus for buying that product and can redeem points for ecologically responsible items. This also encourages more socially responsible behavior, which is also an overall consumer trend,” Hlavinka noted.

She also predicts more chains will break out of rebate programs and get more creative.

Another emerging trend is a shift in how the data is being used to communicate promotions. Data gathering reveals a wealth of information about consumers, but a lot of companies don’t look to that data for insight. “In the next five years the companies that are going to do the best in this space are going to be the ones who turn their attention to the treasure trove of data they’ve gathered. This data provides insight provides about your most profitable customers and how you can market to them more effectively,” Hlavinka said.

Many chains are sending coupons, special offers, bar codes to mobile phones in order to reach customers where they are, but to make this work for your chain having a strategy is important. “Smart marketers are going to use a strong value proposition to get the opt in and use the data you’re collecting to make sure what you are sending them is as relevant as possible so it doesn’t look like spam,” Hlavinka said.

“Rewards offered through loyalty programs will continue to be a key differentiator. With so many loyalty programs available to consumers through multiple market channels it will be a necessity to offer creative and personal rewards. Consumers will increasingly demand more offers that are relevant to their personal needs and interests,” agreed Amerson. n

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